Jio GigaFiber to Get Rs.500 Billion Investment From Reliance Jio; Targets 500GB Data Usage Per Month

Reliance Jio’s Mukesh Ambani recently announced in their annual general meeting that they are looking to launch the Fiber to home services by the end of this year.

Investment in Jio GigaFiber:

The investment in this project is estimated to be about Rs. 5000 crores and is said to fully roll out in the next 2-3 years. This move is seen as a strategy to foray furthermore by the giant company into operations across various sectors. The launch will be an attempt by the Company to expand its operations and capitalise the broadband markets.

At the annual general meeting, Mukesh Ambani said that, “At Jio, we are determined to take India to be among the top-five in broadband connectivity, both for mobility as well as fiber-based wireline connectivity,” He also stated that ” “We have built future-proof networks and will continue to deliver the most advanced technologies to our customers for decades to come.”

With this announcement, and the entry of Jio in the broadband sector and considering their disruptive attitude in business, it would be interesting to see how the competitors would react and provide competitive services.

Jio is changing usage patterns:

In the announcement, they also mentioned that Jio is targetting its customers to use 500 GB per month, which is nearly 200 times more than what an average customer uses through their mobile.

The fiber to home service offers customers direct fiber connectivity directly to their houses, unlike the traditional fiber networks which offer connectivity vis cables resulting in low connectivity speeds.  The fiber to home services aims to provide broadband internet service, cable TV, home surveillance and landline.

Effect of Reliance Jio on competitors:

Ever since Jio has started their operations in September 2016, the losses have been mounting up for competitors like Bharti Airtel, Idea and Vodafone. In the case of Idea, the average revenue per customer continues to decline to make it difficult to bear the operating costs and generate revenues.

In May 2018, Reliance Jio offered postpaid tariffs that were less than half compared to the competitors and it was also doubled up with way cheaper International call tariffs. The data allowance had also been increased considerably. However, in June quarter the impact is said to have been very little as the plan was available only for half of June month and later called off.

In the March quarter, the earnings of competitors Bharti Airtel and Idea declined considerably to up to 3.7% and 5.7% respectively. Both these companies were incurring losses at EBITA level in the March quarter of the previous financial year and the losses are only expected to increase in the first quarter of this financial year. The other competitor Vodafone India too is not doing any better and s heavily betting on the Vodafone Idea merger for the situation to improve.

Currently, Jio has also brought in competition in the feature phone segment after they received a lukewarm response to their JioPhone offer. The company has reported fair growth rates in their smartphone segment. The overall customer base has been reported to be increased in early July with subscriptions increased to 215 million users as compared to 186.6 million at the end of March 2018. It is also reported that as long as subscriptions keep increasing for Reliance Jio users, the tariffs of the plans would continue to remain the same.

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